Trading sovereignty, debts and values

Last Thursday, Greeks went on the streets for the 20th demonstration against austerity measures aimed at making Greece capable of meeting its debt obligations under the auspices of the EU which has just won the Nobel Prize for the way it has handled the euro zone debt crisis. The demonstrations came on the day EU financial czars were to meet in Brussels over Greece and its bail out progress report. A Greek woman in an interview shouted that Greece should pay its peoples salaries and hospital bills and stop paying the creditors. An economist mused that Europe should pool sovereignties which is something the British never want to hear. In a BBC Hard talk programme a French Minister said achieving social justice is at the heart of France’s new government policy of taxing the rich massively to fund revenue generation, pay Frances huge debts and reduce its spiraling deficits.

From China came the news that the country’s growth rate has stalled from 7.6% to 7.4 % because of the decreased demand for its products especially from the huge market of the euro zone in now dire economic straits; and from nearby Ghana came the news that a court in Accra has ordered the seizure of an Argentine ship because of Argentina’s debt default of 2001.

Unfortunately, Greece has replaced Argentina nowadays as the wayward or prodigal son of the global financial community and the painful human side of that opprobrium is what the Greek woman has uttered in blind fury at austerity and economic solutions that create more human misery and do not have a human face. But then Greece has to pay her creditors and honor its sovereign debt obligations to remain a credible member of the global financial system. No one or nation on earth wants to be like Greece today and that was very aptly and succinctly put at the expense of incumbent President Barak Obama by his opponent at the last town hall presidential debate last Tuesday in the US.

Mitt Romney, the Republican presidential candidate put a dagger at the heart of Obamanomics, the economic policy of the US government in the last four years, when he said that the US could not afford another four years of Obama’s presidency as that would create a debt crisis for the US similar to the euro debt crisis. According to Romney – ‘We ‘ve gone from $ 10tn national debt to $16tn of national debt. If the president were reelected we ‘d go to $20tn of national debt. This puts us on a road to Greece.‘ Given events in Greece and the sovereign reputation of that nation nowadays, Mitt Romney has laid a grievous charge and painted a dire figure of Obama’s economic policies that cannot be easily waived off especially as the Greek demonstrations took off almost after the debate that many thought Obama had won this time around.

Although there is a third debate on October 22 there is no denying that Obama has found his mettle to defend his policies but there is not much he can do to deny high unemployment figures as well as the glaring deficits. More importantly he must find a quick advert or campaign message to counter the ‘road to Greece message‘ of Mitt Romney as the satellite pictures of the austerity demonstrations in Greece on the global media are bound to be exploited by the Mitt Romney campaign team in influencing the electorate in the November 6 presidential elections.

In reality what Romney and the Greek woman have said separately are two sides of the same coin. The woman reply is personal anguish while Romney’s categorization is sovereign and is being used to get a political advantage and win power from Obama. Both are allowed in politics and in any democracy and both have taken a step further. You can bet the Greek woman will be in the forefront of the demonstrations on the street of Athens and will predictably be dealt with by the police. With regard to Romney it is up to Obama to allow his opponent to trick him out of the White House.

At the first debate Obama looked like a king who forgot his clothes at home and almost danced naked. At that first debate Obama allowed Romney to look, as his supporters said, dynamic and radiant while Obama looked professorial and stuck on issues. The town hall debate has equaled matters a bit but there is no denying that the aura of incumbency has been badly damaged by the challenger who has become bolder and like a lone wolf that has smelt blood, now knows that the this president can be mortally rattled in this close presidential race. It is my considered opinion that the Obama campaign team must be more aggressive than hitherto and the best opportunity for now is to counter ‘the Road to Greece‘ message as it affects Obama’s domestic economic policy. This is because for once an incumbent president in the US presidential campaign has allowed an opponent to successfully make a mockery of his existing economic policy using an example of a very economically sick foreign nation – Greece. That really is unfortunate for the Obama campaign team.

On the suggestion that the EU members must find a way to pool sovereignties I think that is an idea that is easier said than done. What part of individual member nations will go into the sovereignty common pool and which will not? Is it security, finance, banking, political parties, or tourism? Given the unique culture, chequered history and peculiarities of each nation, who will bell the cat and cast the first stone in surrendering sovereignty? Can Germany with its history of fiscal discipline and prudence ever come to accept Greece’s profligacy as a way of life to be condoned or tolerated?

Can any EU nation other than France tax its rich citizens that high and take compliance for granted as a fait accompli? Can any other nation in Europe respect its monarchy like the British do and how are the British going to put that in a common European sovereignty pool when it is the basis of their political stability? And how many EU nations can put up with the sex and fun loving lifestyle of Italy‘s former PM Silvio Berlusconi the owner of the AC Milan football club and the most popular Italian leader of our time? Really pooling sovereignties in the EU will involve so much horse trading and bargains that Europe may not be able to recognize itself at the end of the exercise.

However the cheering news on the global economic scene was the news from the Chinese of a reduction in their growth rate, albeit minimal. To those who think that Chinese economic growth was going to burst, the slow pace is good news. To the Chinese who have planned their economic progress with the Chinese Communist Party holding the reins and its high officials firmly in the saddle, the small reduction is a sign of economic stability. This is because China‘s growth has been based on exports and manufacturing with credit financed investment directed by the Chinese government.

So China has never claimed that its economy is unregulated or that the blind forces of the market are in control and competition is there for the taking by all stake holders. It follows therefore that since purchasing power from its customers overseas especially the euro zone is diminishing because of the global financial crisis its economic performance results must reflect such shortcoming hence the slight reduction in the growth rate as reported for the quarter under consideration.

There is no denying that China will eventually take over the world economy given its huge resources and the discipline of its political leadership in providing what has been called guided democracy in most of the mock democracies littering the globe .

What is not too certain is for how long the Chinese government which is financing the production of communication gadgets and IT equipment at an unprecedented rate at its massive computer villages in China is going to be able to monitor the flow and use of the information in and out of China and still be able to keep power within an elite group of party members who still run China as at now.

China was rattled by the North African street revolutions and thought it could not happen in China. It has been emboldened in this frame of mind by events in Libya where it felt cheated by the French and English who ditched Gaddafi, an age long ally of Russia and China, both long communist friends. China is using events unfolding in Syria to consolidate its official view that strong governments must not give in to popular uprising such as those that removed Mubarak in Egypt and later Gaddafi in Libya.

That is at the heart of its seeming solidarity with Russia in not allowing the no fly zone in Syria as it knows that the masses of its people are watching on the internet and pondering why what is sauce for the goose in foreign lands cannot be good for the Chinese masses at home.